Does Inequality Matter?
How People Perceive Economic Disparities and Social Mobility
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The recovery after the COVID-19 crisis requires policies and reforms that tackle inequalities and promote equal opportunities. However, the implementation of such reforms requires widespread support from the public. To better understand what factors drive public support, this report provides a detailed cross-country analysis of people’s perceptions of and concern over inequality. It documents how concern over income disparities has risen in OECD countries over the long run. Nowadays, in most countries a large majority of the population believes that income disparities are too large and that intergenerational mobility is low. Yet, sufficient support for inequality-reducing policies may fail to arise if people do not agree on concrete policy options, or doubt the effectiveness of such policies. Moreover, even when the majority demands more equality, a divided public opinion can complicate the introduction of reforms. The report highlights how people within the same country are often divided as to the extent of inequality and what should be done to address this challenge. The report illustrates how the findings from analysis of perceptions and concerns can serve to inform policy making.
Also available in: French
How does inequality shape the demand for redistribution?
This chapter focuses on how actual and perceived inequality shape preferences for redistribution. It shows that demand for redistribution is closely related to concern over income disparities and what underlies them, i.e. perceptions of and preferences for economic inequality. Changes in actual inequality, as measured by conventional indicators, are associated with changes in demand for redistribution, but only as long as changes in concern evolve in the same direction. The effect of changes in inequality on demand for redistribution reflects both changes in relative income – by making some people poorer and thus more favourable to government intervention – and people’s own preferences for the aggregate level of inequality. Despite being related to inequality, demand for redistribution has increased only mildly over time and reacted only to a limited extent to rises in concerns and inequality. The chapter assesses possible explanations, based on observational evidence and a review of survey experiments.
Also available in: French
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